Real Estate Mitochondria

HAND ME THAT ROPE

A while back a client came to me somewhat puzzled. He owned a few investment properties and ran a successful interstate business with more than 20 staff. He was a man I thought was very much “on the ball” and “honest as the day was long”.

One of his properties was a Holiday/Vacation Let, managed by a Live In, On Site Management team that here in Queensland we know as a “Management Rights”. Almost anyone who can obtain a rudimentary government licence can buy Management Rights to a group of properties, a 3 level complex or a massive 70 story high rise.

Don’t get me started on how easy it is to obtain a licence to operate, in some cases, a multi-million dollar business with thousands of clients, sophisticated software packages and heavy legal responsibilities.

By the way, I hold a full Real Estate Licence in the State of Queensland, which is almost a year’s study and plenty of examinations, and Trust (Escrow) Account Audits.

Anyway, I digress!

My client’s concern was his low monthly cheque (check!) from the Management team. I knew the building and to my mind, especially in holiday and vacation seasons, was always fully booked. Yet he had a monthly statement telling him that he only had people staying in his apartment 10 days out of the month, with ridiculously high “maintenance” and other charges adding insult to injury.

I obtained a key to the Apartment and a letter of authority from him to be lawfully on the “common property” of the Apartment Complex and vowed to “drop by” every day of the following calendar month.

Luckily the balcony was visible from the street so it was fairly easy to see if any beach towels were hung out to dry and people were staying in the Unit. When I could not see any evidence on the balcony I would knock on the door to his apartment and if no answer, use the key to take a peek inside. (Don’t worry. I checked my legal right to do this on behalf of my client with competent Counsel!)

At the end of the month I tallied the nights I observed people staying in the Apartment and my client waited for his statement and cheque to arrive.

As you can guess, the statement and my observations didn’t match. There was a significant difference…

The rest of the story lies in the hands of lawyers, government investigators and ire of the rest of the owners in the complex. The outcome was not pretty. I thought there was going to be a lynching!